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Indonesia’s central bank to deepen financial market by introducing new products

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Indonesia’s central bank will issue several new regulations allowing trade in commercial paper and negotiable certificates of deposit (NCDs) in an effort to deepen the country’s financial markets, its deputy governor said on Thursday.

Senior Deputy Governor Mirza Adityaswara told a bankers’ seminar that some banks parked excess funds with Bank Indonesia (BI) rather than lend in the interbank money market. As a result, BI managed about 322 trillion rupiah (£18.37billion) of banks’ short-term excess liquidity, he said.

Adityaswara said that BI plans to permit traded in several instruments soon to encourage banks to make put those funds to work.

“We will issue a regulation allowing transaction of commercial papers and a regulation allowing NCDs to be traded to make them more liquid,” he said.

“This is important so that banks’ liquidity is flowing, so that those who need liquidity can get it and those who manage excess liquidity can find a way to channel it,” added Adityaswara.

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Paul

The author Paul